Debt, Mortgages & Rent

People can get into debt for many reasons, but there is one clear warning sign that you need to get help with your debt problem, and that’s using a credit card to help keep a roof over your head.

In research carried out by homeless charity Shelter, it was discovered that around 1 million UK households had used a credit card to pay their mortgage or rent during 2009. This alarming figure means that about 6% of UK homes have been affected in total.

Shelter’s research also found that there was an overall rise in the number of people using credit cards to pay their rent or mortgage in the last 12 months which is bound to have an impact on household debt levels.

Credit cards and charging orders

Credit card debt is unsecured which means it’s not usually secured against your property unlike a mortgage. However, because more and more people are using credit cards to pay their mortgages each month and getting deeper and deeper into debt because of it, more and more lenders have been going to court to get what’s called a charging order.

A charging order results in an unsecured debt such as a credit card being changed to a secured debt, which in theory means you credit card company could then ask the court to sell someone’s home in order to pay off what they owe on their credit card.

Do you find yourself in this situation?

Many people wrongly assume that they can pay their rent or mortgage for one month using a credit card and that they’ll be able to sort it out in future months.

Having to use a credit card in this way is a massive warning sign that your finances are in bad shape. If you choose to ignore this problem then you could soon be in a lot of debt and struggling to find a way out.

If you’re paying your mortgage or rent with a credit card, ask yourself the following two questions;

• What will you do if credit card interest rates go up?
• Where will you get the money from to pay off last month’s mortgage/rent and still be able to pay it this month?

Many people in this situation are withdrawing cash on their credit cards and paying it into their bank accounts in order to meet their rent or mortgage direct debits. Credit card lenders charge a higher interest rate for cash withdrawals which means you’ll have to pay back a lot more than you took out.

If you’re reading this article and are in this situation then it’s crucial that you contact us now for immediate advice before you fall any deeper into debt and risk losing your home.